Cut off the head, and you strip the entire army of its ability to resist. Something similar is happening in the cryptocurrency market. For a long time, Michael Saylor's Strategy inspired other companies, but now it's sliding downhill. Its shares have lost about 15% of their value due to an unsuccessful attempt to sell preferred stock to finance Bitcoin purchases. This is one of the factors behind the decline in BTC/USD.

Strategy has many followers. So-called crypto treasuries hold 4.7% of all Bitcoin in circulation — a total worth of $109 billion. These companies raise capital by issuing securities: common and preferred stock, and bonds. Then they invest the funds in cryptocurrency. Michael Saylor's firm was long considered the gold standard. If it fails, the entire market could crash.

The BTC/USD downtrend is not just about the struggles of crypto treasuries. Bitcoin is losing its competitive edge to Ethereum and is transitioning from a high-risk asset to a more traditional one. It's more reliable than it used to be. Large players, including banks and investment firms, are showing interest. But the drop in volatility from 200% ten years ago to the current 38% is a bad sign for those hoping to get rich quickly. The days of buying a digital asset just because it was rising are gone.

Capital flow trends in Bitcoin and Ethereum ETFs

Ethereum's blockchain — where Ether (ETH) is the native token — is experiencing strong demand. It hosts numerous stablecoins, whose growing adoption in commerce and other transactions is boosting interest in ETH/USD. As a result, bitcoin-focused ETFs lost over $1 billion in August, while Ethereum ETFs increased their holdings by $3.3 billion.

US stock indices hitting all-time highs and gold poised to resume its bullish trend look far more attractive than Bitcoin right now. Capital is flowing out of the crypto market, dragging BTC/USD quotes down. Other digital assets are getting caught in the crossfire as well. The risks of a broader reversal are tilted downward, while derivatives are pricing in a move toward $100,000 for Bitcoin and $4,000 for Ethereum.

Bitcoin also isn't helped by the news that Coinbase and OKX, the two largest crypto exchanges, are aggressively seeking access to Australia's AU$4.3 trillion pension system. Initial focus is on SMSFs (Self-Managed Superannuation Funds), which hold about a quarter of all pension assets.

In my view, the decline of interest in Bitcoin as a high-risk asset increases the risks of a deeper correction, even though the long-term uptrend remains intact — supported by limited supply and strong institutional demand.

Technical outlook for BTC/USD

Technically, on the daily chart, a reversal pattern — Anti-Turtles — is playing out. As long as prices remain below the pivot level of 111,500 and fair value at 113,400, the focus should remain on selling.